Angeina Jolie appears in a cover story in the June issue of "Reader's Digest" magazine. / Reader's Digest

by Geri Coleman Tucker, USA TODAY

by Geri Coleman Tucker, USA TODAY

Reader's Digest is banking on a second circuit through bankruptcy court to shore up its fortunes.

RDA Holding, parent company of the Reader's Digest Association, filed Sunday for Chapter 11 reorganization and put in motion a restructuring plan with its creditors that would convert about $465 million in debt to equity. The company also has a commitment for $105 million in debtor-in-possession financing.

"After considering a wide range of alternatives, we believe this course of action will most effectively enable us to maintain our momentum in transforming the business," CEO Robert Guth says.

Like many print publishers, RDA has seen the fortunes of its largely print-based products -- including its flagship Reader's Digest -- founder as the shift to digital information hurt subscriptions and newsstand sales.

Last year, it sold its Allrecipes.com property to Des Moines-based magazine publisher Meredith for $175 million and its Weekly Reader to Scholastic for an undisclosed sum.

The company, which says it still has more than "21 market-leading brands in 76 countries," first filed for bankruptcy protection in August 2009 and emerged in February 2010. But its comeback has been hampered by lingering debt and declines in Europe and Asia.

Reader's Digest has been around for 91 years and remains one of the world's largest-circulation magazines.

It is the fifth-most-popular magazine in the U.S. with a domestic circulation of about 5.5 million, according to the Alliance for Audited Media, behind two AARP publications, Game Informer magazine, and Meredith's Better Homes and Gardens. And Guth says the company is gaining traction in digital media.

He says this second bankruptcy filing "will enable us to continue to define our business by focusing our resources on our strong North America publishing brands, which have shown a new vitality as a result of our transformation efforts, particularly in the digital arena."

Van Conway, CEO of Detroit-based bankruptcy and turnaround firm Conway MacKenzie, says RDA is likely looking to shed the whole enterprise. "The only way to monetize the investment is a sale of the business down the road or a leveraged buyout or recapitalization of new debt," he says.

The company will continue to publish its magazines during the restructuring period and says it expects to conclude its reorganization within about six months.

Weil Gotshal & Manges is representing the company in the bankruptcy proceeding.